Starbucks Closes 250 More Stores, and Calls It Quality Control

Starbucks is trimming again. The company will close roughly 250 stores across North America by the end of the year, about 1% of its roughly 18,000 locations, and it is not blaming rent or the neighborhood. The stores on the list, the company said, simply "do not deliver the coffeehouse experience and financial performance expected of the brand."

The bill for that judgment comes to about $300 million: $200 million for lease exits and employee separation costs, plus $100 million to dispose of assets nobody needs anymore. COO Mike Grams says affected employees will get "transfer opportunities wherever possible," with severance for anyone who cannot relocate. This is the second cut in as many years. Last year's $1 billion restructuring already closed stores, renovated a thousand more, and eliminated about 2,000 corporate jobs, with another 700 cut this year.

Here is the part Starbucks wants you to notice more than the closures: it also projects 440 net new store openings globally this fiscal year, and it just posted its fourth straight quarter of sales growth, with real strength in North America. Read one way, this is a company still bleeding locations. Read the way Starbucks would rather you read it, this is a business finally being honest about which stores were never going to work, so it can put the capital somewhere that will. Either way, closing your way to health is a strategy with a shelf life, and Starbucks is betting it can find the finish line before investors stop giving it credit for "addition by subtraction."

Kyle Duford, Founder & Editor, BRNDWIRE. More from Kyle →